LEE — Lee Enterprises, Incorporated

Summary of Lee Enterprises Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Total revenue for Q4 2025 reached $562 million, with 53% derived from digital sources.
• Digital subscription revenue totaled $94 million, supported by 633,000 digitally-only subscribers, marking a 16% year-over-year growth on a same-store basis.
• The digital marketing services segment, Ampli Digital Agency, surpassed $100 million in revenue, achieving 5% growth on a same-store basis.
• Adjusted EBITDA showed growth for the second consecutive quarter, with cash costs decreasing 5% to $524 million.
• Total digital revenue for the fiscal year was $298 million, indicating a significant shift towards a digital-first business model.

2. Strategic Updates and Business Highlights:

• Lee Enterprises is focused on a three-pillar digital growth strategy, targeting $450 million in digital revenue by 2030.
• The company has successfully modernized its digital platforms and expanded its product ecosystem, leveraging data and marketing for enhanced audience engagement.
• Cost management initiatives included a $40 million reduction in annualized costs and an additional $10 million in cuts entering fiscal 2026.
• The company is transitioning from print to digital, with digital revenue now representing 53% of total revenue, up from 21% in 2020.

3. Forward Guidance and Outlook:

• For fiscal 2026, Lee Enterprises anticipates mid-single-digit growth in adjusted EBITDA.
• The company aims to achieve 175,000 recurring digital subscribers and $175 million in digital subscription revenue by fiscal 2030.
• A $50 million common stock rights offering is planned to support digital transformation and deleveraging, which could reduce interest expenses significantly.

4. Bad News, Challenges, or Points of Concern:

• A cyber incident in February 2025 disrupted several key projects, impacting revenue generation capabilities.
• Despite overall growth, the company faced challenges in reducing debt, with a reported $3.5 million reduction in fiscal 2025, primarily due to the cyber incident's impact on operations.
• The upcoming departure of CFO Tim Milledge may raise concerns about continuity in financial leadership during a critical transformation phase.

5. Notable Q&A Insights:

• Since the launch of its credit agreement in 2020, Lee has reduced debt by $121 million, although the cyber incident temporarily increased the debt balance.
• The company confirmed that operational efficiencies and asset sales contributed to the modest debt reduction in fiscal 2025.
• Management reiterated confidence in achieving long-term digital revenue targets despite current challenges, emphasizing the importance of their digital transformation strategy.

Overall, Lee Enterprises is navigating a significant transition towards a digital-first model, achieving notable revenue growth in digital segments while managing operational challenges and preparing for future financial flexibility.